Urban Real-Estate Prices Are Booming, but Most People Live in Suburbs

Has there been a Renaissance in city living over the past year? That depends on how you look at it.

Associated Press

Urban real estate prices increased faster than suburban prices between March of this year and last, according to Trulia. But suburbs continue to outpace cities in population growth, and for good reason — there’s a lot more suburbs than cities, and since it’s easier to build in suburbs, the ‘burbs can add new homes more quickly, holding prices back.

Nationally, urban home prices increased 9.8% over the past year. Suburban home prices grew 9.4%. The order is flipped for household growth, however: Suburban population increased by 1.1% and the urban population by 0.9%.

Trulia defines urban and suburban differently than your typical demographer. Rather than focus on political boundaries — say, the City of San Francisco compared with smaller cities around it — they define urban and suburban by form.

An urban neighborhood, by Trulia’s definition, is one where a majority of the housing is attached product like apartments and towering condos — the kind of place that “feels like a city.” Suburban neighborhoods are where there’s a majority of single-family homes.

Some people will ask: What about all the cranes and high-rises you see in cities across the country?

There are indeed a lot of cranes going up, and prices in the few ultra-dense downtown neighborhoods — high-rise neighborhoods, in Trulia’s parlance — rose 11.4%, outpacing other urban and suburban neighborhoods. But a lot of those cranes are building apartments after years of underbuilding during both the boom years and the recession. To some extent, cities are playing catch-up.

City populations are also growing faster than they were during the boom years — just not as fast as other suburbs.

“To sum up: although home prices and population are growing fastest in hyper‐urban high‐rise neighborhoods, asking prices are rising only slightly faster in urban neighborhoods than in suburban neighborhoods. Furthermore, population is growing faster in the suburbs than in urban neighborhoods,” notes Jed Kolko, Trulia’s chief economist, in a release. “The suburbs are far from over.”

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